What next with cryptocurrency regulation after FIT21 enters the Chamber?

On Wednesday, the U.S. House of Representatives made history by passing the Financial Innovation and Technology for the 21st Century Act (FIT21) by a vote of 279 to 136. Republicans led the landmark bill, representing the first comprehensive legislation to regulate the cryptocurrency market. The bill was supported by Speaker Nancy Pelosi and 71 other Democrats. Moreover, the importance of the act was emphasized by Pelosi, who argued that it lays the foundation for responsible innovation. She also stressed the need for further improvements to protect consumers and investors.

Implications and provisions

FIT21 seeks to increase the role of the Commodities Trading Commission in overseeing cryptocurrency markets, especially those involving digital assets such as Bitcoin. It also introduces solutions to facilitate secondary market trading, which include provisions on stablecoins and anti-money laundering. Although the FIT21 bill passed the House, its future in the Senate is uncertain and may not pass this year. But supporters hope it will influence Congress’ next agenda in January.

Read also: The US Biden administration demands changes to the FIT 21 Act ensuring better consumer protection and says it will not veto

Bilateral perspectives

Patrick McHenry, chairman of the House Financial Services Committee who plans to retire in January 2025, stressed his desire to support the bill despite his impending retirement. Moreover, McHenry’s emphasis reflects appreciation for growing bipartisan support for regulatory transparency in the crypto industry.

Meanwhile, Ron Hammond of the Blockchain Association mentioned a significant change in Congress’ approach to cryptocurrencies, signaling a potential easing of current regulatory barriers. On the other hand, while the White House has opposed FIT21, it continues to welcome cooperation with Congress on the regulatory framework.

Criticism and challenges

Not all lawmakers support FIT21. Ranking Democrat Maxine Waters criticized the bill, saying it did not sufficiently strengthen the CFTC’s powers and could weaken the agency’s enforcement capabilities. Additionally, SEC Chairman Gary Gensler expressed concerns.

He stressed that FIT21 may undermine current regulatory standards and may not protect investors from industry abuses. Regardless of these criticisms, the FIT21 bill passed in the House is crucial to the ongoing debate over crypto regulation in the United States.

What’s next?

FIT21’s legislative path appears somewhat challenging given the lack of a companion bill in the Senate and significant opposition from key Democrats in the Senate. Investment analysts also predict that this bill has little chance of becoming law in Congress.

However, they recognize its key role in highlighting major regulatory issues; lawmakers such as Senators Kirsten Gillibrand and Cynthia Lummis continue to push for comprehensive cryptocurrency regulation, although their efforts differ from FIT21. Therefore, as discussions about stablecoins and market structure continue, the future of cryptocurrency regulation will likely continue to be debated and negotiated.

Also check out the FIT21 bill’s journey to the Senate: what it means for XRP’s decentralized status